Test Bank for Principles of Auditing and Other Assurance Services 18th Edition by Whittington Multiple Choice Questions An operational audit differs in many ways from an audit of financial statements Which of the following is the best example of one of these differences? A The usual audit of financial statements covers the four basic statements, whereas the operational audit is usually limited to either the balance sheet or the income statement B The boundaries of an operational audit are often drawn from an organization chart and are not limited to a single accounting period C Operational audits not ordinarily result in the preparation of a report D The operational audit deals with pre-tax income The Statements on Auditing Standards have been issued by the: A Auditing Standards Board B Financial Accounting Standards Board C Securities and Exchange Commission D Federal Bureau of Investigation Which of the following are issued by the Securities and Exchange Commission? A Accounting Research Studies B Accounting Trends and Techniques C Industry Audit Guides D Financial Reporting Releases The review of a company's financial statements by a CPA firm: A Is substantially less in scope of procedures than an audit B Requires detailed analysis of the major accounts C Is of similar scope as an audit and adds similar credibility to the statements D Culminates in issuance of a report expressing the CPA's opinion as to the fairness of the statements Which of the following types of services is generally provided only by CPA firms? A Tax audits B Financial statement audits 3 C Compliance audits D Operational audits Which of the following attributes most clearly differentiates a CPA who audits management's financial statements as contrasted to management? A Integrity B Competence C Independence D Keeping informed on current professional developments The FDIC Improvement Act requires that management of large financial institutions engage auditors to attest to assertions by management about the effectiveness of the institution's internal controls over: A Compliance with laws and regulations B Financial reporting C Effectiveness of operations D Efficiency of operations Passage of the Sarbanes-Oxley Act led to the establishment of the: A Auditing Standards Board B Accounting Enforcement Releases Board C Public Company Accounting Oversight Board D Securities and Exchange Commission The organization charged with protecting investors and the public by requiring full disclosure of financial information by companies offering securities to the public is the: A Auditing Standards Board B Financial Accounting Standards Board C Government Accounting Standards Boards D Securities and Exchange Commission The serially-numbered pronouncements issued by the Auditing Standards Board over a period of years are known as: A Auditing Statements of Position (ASPs) B Accounting Series Releases (ASRs) C Statements on Auditing Standards (SASs) D Statements on Auditing Principles (SAPs) Inquiries and analytical procedures ordinarily form the basis for which type of engagement? A Agreed-upon procedures B Audit C Examination D Review Which of the following best describes the reason why independent auditors report on financial statements? A A management fraud may exist and it is more likely to be detected by independent auditors B Different interests may exist between the company preparing the statements and the persons using the statements C A misstatement of account balances may exist and is generally corrected as the result of the independent auditors' work D Poorly designed internal control may be in existence Which of the following terms best describes the audit of a taxpayer's tax return by an IRS auditor? A Operational audit B Internal audit C Compliance audit D Government audit A summary of findings rather than assurance is most likely to be included in a(n): A Agreed-upon procedures report B Compilation report C Examination report D Review report Which statement is correct with respect to continuing professional education (CPE) requirements of members of the AICPA? A Only members employed by the AICPA are required to take such courses B Only members in public practice are required to take such courses C Members, regardless of whether they are in public practice, are required to meet such requirements D There is no requirement for members to participate in CPE Which of the following professionals has primary responsibility for the performance of an audit? A The managing partner of the firm B The senior assigned to the engagement C The manager assigned to the engagement D The partner in charge of the engagement When compared to an audit performed prior to 1900, an audit today: A Is more likely to include tests of compliance with laws and regulations B Is less likely to include consideration of the effectiveness of internal control C Has bank loan officers as the primary financial statement user group D Includes a more detailed examination of all individual transactions The Government Accountability Office (GAO): A Is primarily concerned with rapid processing of all accounts payable incurred by the federal government B Conducts operational audits and reports the results to Congress C Is a multinational organization of professional accountants D Is primarily concerned with budgets and forecasts approved by the SEC Operational auditing is primarily oriented toward: A Future improvements to accomplish the goals of management B The accuracy of data reflected in management's financial records C The verification that a company's financial statements are fairly presented D Past protection provided by existing internal control Which of the following is not correct relating to the SarbanesOxley Act? A It toughens penalties for corporate fraud B It restricts the types of consulting CPAs may perform for audit clients C It created the Public Company Accounting Oversight Board (PCAOB) as a replacement for the Financial Accounting Standards Board D It eliminates a significant portion of the accounting profession's system of self-regulation The attest function: A Is an essential part of every engagement by the CPA, whether performing auditing, tax work, or other services B Includes the preparation of a report of the CPA's findings C Requires a consideration of internal control D Requires a complete review of all transactions during the period under examination Historically, which of the following has the AICPA been most concerned with providing? A Professional standards for CPAs B Professional guidance for regulating financial markets C Standards guiding the conduct of internal auditors D Staff support to Congress Governmental auditing often extends beyond examinations leading to the expression of opinion on the fairness of financial presentation and includes audits of efficiency, economy, effectiveness, and also: A Accuracy B Evaluation C Compliance D Internal control A typical objective of an operational audit is for the auditor to: A Determine whether the financial statements fairly present the entity's operations B Evaluate the feasibility of attaining the entity's operational objectives C Make recommendations for improving performance D Report on the entity's relative success in attaining profit maximization The risk associated with a company's survival and profitability is referred to as: A Business Risk B Information Risk C Detection Risk D Control Risk Attestation risk is limited to a low level in which of the following engagement(s)? A Both examinations and reviews B Examinations, but not reviews C Reviews, but not examinations D Neither examinations nor reviews The risk that information is misstated is referred to as: A Information risk B Inherent risk C Relative risk D Business risk The right to practice as a CPA is given by which of the following organizations? A State Boards of Accountancy B The AICPA C The SEC D The General Accounting Office An integrated audit performed under the Sarbanes-Oxley Act requires that auditors report on: financial statement: A)yes, B)yes; C)no; D)No Internal Control: A)yes, B)no; C)yes; D)No A Option A B Option B C Option C D Option D An engagement in which a CPA firm arranges for a critical review of its practices by another CPA firm is referred to as a(n): A Peer Review Engagement B Quality Control Engagement C Quality Assurance Engagement D Attestation Engagement The risk that a company will not be able to meet its obligations when they become due is an aspect of: A Information risk B Inherent risk C Relative risk D Business risk 20 Free Test Bank for Cornerstones of Managerial Accounting 4th Edition by Mowen Multiple Choice Questions Which of the following is an example of the management activity referred to as planning? Developing a strategy for disposing of hazardous waste The decision to eliminate an unprofitable segment of an organization The decision to outsource an organization's payroll processing All of these are correct Developing a company strategy for responding to anticipated new markets is an example of planning controlling decision making all of these are correct Accountants that have a Certificate in Public Accounting (CPA): are the only accountants permitted to serve as external auditors 2 must pass a national examination and be licensed by the state in which they practice may be held responsible to provide assurance concerning the reliability of a firm's financial statements all of these statements are true Investigating production variances and adjusting the production process is an example of planning controlling decision making all of these Financial accounting is concerned with the information about the firm as a whole has to adhere to GAAP policies focuses on external users all of these are correct Which of the following would occupy a line position in a hospital? manager of the cafeteria hospital administrator chief of surgery none of these Managerial accounting is primarily for external users has no mandatory rules provides information based on historical information must adhere to GAAP The primary objective of managerial accounting is to provide stockholders and potential investors with useful information for decision making to provide banks and other creditors with information useful in making credit decisions to provide management with information useful for planning and control of operations to provide the Internal Revenue Service with information about taxable income Which of the following is not an objective of managerial accounting? To prepare external reports for investors, creditors, government agencies, and other outside users 2 To provide information for costing of services, products, and other objects of interest to management To provide information for planning, controlling, evaluating and continuous improvement To provide information for decision making Which of the following would normally occupy a line position? staff accountant accounting manager vice-president of marketing treasurer Which of the following would normally occupy a staff position? assembly worker cost accounting manager factory manager all of these Which of the following areas is not emphasized on the CMA examination? external auditing and business law economics, finance, and management decision analysis and information systems financial accounting and reporting The objective of profit maximization should be the only goal of an organization is an objective of financial accounting but not managerial accounting should be achieved through legal and ethical means should outweigh the goal of product quality Managerial accounting reports are prepared according to GAAP guidelines to meet the needs of decision makers within the firm for external users all of these are correct The controller of an organization participates in planning controlling decision making all of these are correct Total quality management emphasizes zero defects 2 continuous improvement elimination of waste all of these are correct Persons in the United States who provide assurance service are designated as Certified Public Accountants Certified Financial Accountants Chartered Accountants Certified Management Accountants Which of the following would not be an example of a value-added activity? timely delivery of products offering the customer a variety of products storage of finished products excellent customer service The standards of ethical conduct for managerial accountants include competence and performance integrity and respect for others confidentiality, confidence, integrity, and observance competence, confidentiality, integrity, and credibility Activity-based costing strives to create an environment that will enable works to manufacture zerodefect products is the process of choosing among competing alternatives was established in response to financial scandals encourages process-value analysis  ... information for costing of services, products, and other objects of interest to management To provide information for planning, controlling, evaluating and continuous improvement To provide information... information for decision making to provide banks and other creditors with information useful in making credit decisions to provide management with information useful for planning and control of. .. service The standards of ethical conduct for managerial accountants include competence and performance integrity and respect for others confidentiality, confidence, integrity, and observance